CERTIFICATION

FREQUENTLY ASKED QUESTIONS

Q1: Who is eligible for minority-owned business enterprise (MBE) Certification?

To qualify for an MBE Certification, a business must be at least 51% owned, operated and controlled by an American ethnic minority group member who is a U. S. citizen, physically located in the North Texas area, to include the Dallas/Fort Worth metroplex and surrounding counties. Minority status constitutes anyone belonging to one of following ethnic groups:

Asian-Indian*

Asian-Pacific*

Black*

Hispanic*

Native American*

*Minority Group For purposes of NMSDCs program, a minority group member is an individual who is a U.S. citizen (not a green card holder) with at least 1/4 or 25% minimum (documentation to support claim of 25% required from applicant) of the following:

Asian-Indian A U.S. citizen whose origins are from India, Pakistan or Bangladesh.

Asian-Pacific A U.S. citizen whose origins are from Japan, China, Indonesia, Malaysia, Taiwan, Korea, Vietnam, Laos, Cambodia, the Philippines, Thailand, Samoa, Guam, the U.S. Trust Territories of the Pacific or the Northern Marianas.

Black A U.S. citizen having origins in any of the Black racial groups of Africa.

Hispanic A U.S. citizen of true-born Hispanic heritage, from any of the Spanish-speaking areas of the following regions: Mexico, Central America, South America and the Caribbean Basin only. Brazilians shall be listed under Hispanic designation for review and Certification purposes.

Native American A person who is an American Indian, Eskimo, Aleut or Native Hawaiian, and regarded as such by the community of which the person claims to be a part. Native Americans must be documented members of a North American tribe, band or otherwise organized group of native people who are indigenous to the continental United States and proof can be provided through a Native American Blood Degree Certificate (i.e., tribal registry letter, tribal roll register number).

*NMSDC’s definition of Sole Proprietorship is a company owned/operated 100% by one (1) individual or married couple. Split ownership does not constitute Sole Proprietorship.

Q2: Does an applicant have to be a U.S. Citizen to qualify for MBE Certification?

Yes. An applicant must be an U.S. citizen either by birth or naturalization and must have the appropriate documentation. A permanent resident or a “Green Card” holder does not qualify.

No; the NMSDC guidelines require that an applicant must be a US citizen. Green card holders are not US citizens.

Q4: What is the location of the D/FW MSDC’s office?

Dallas/Fort Worth Minority Supplier Development Council (D/FW MSDC)

8828 North Stemmons Freeway – Suite 550

Dallas, TX 75247

Phone (214) 630-0747

Fax (214) 637-2241

Email admin@dfwmsdc.com

Q5: What are North America Industry Classification System (NAICS) codes?

Major corporations use NAICS codes and key word to identify business opportunities. If your NAICS code is not precise and concise, you will miss out on potential business opportunities. Please be smart about the selection of your code(s). Major corporations are not looking for a “jack-of-all-trades.” They are looking for functional experts. The North American Industry Classification System (NAICS) is an industry classification system that groups establishments into industry sectors based on the activities in which they are primarily engaged. The NAICS code is a comprehensive system covering the entire field of economic activities, producing and non-producing. This system replaces the former Standard Industrial Classification (SIC) designations. Corporate America, as well as some local, state and federal government entities use NAICS codes. You are required to identify your businesses’ NAICS designation code. The NMSDC and corporate buying groups use NAICS codes to identify certified MBEs. You may use up to 6 separate NAICS codes. Six digit NAICS codes are required.

Q6: Where may I locate my business NAICS code?

You may locate the NAICS code at your local public library or on the Internet. The Website address is www.naics.com.

Q7: What is the cost of the Certification application process?

$270.00 processing fee for Certification that is collected when certification is complete, if your company’s revenues are less than $1 million annually. Additional fees are assessed for larger companies.

Q8: Does D/FW MSDC certify women-owned business enterprises (WBE)?

No. D/FW MSDC Certification is ethnicity-based rather than gender-based. A Certification applicant must fall into one of the above ethnic minority categories to qualify. The D/FW MSDC does not certify “non-minority” female-owned businesses.

No. D/FW MSDC Certification is ethnicity-based rather than income-based or wealth-based. Most public sector (local, state or federal government, etc.) entities operate within the SDBE arena.

Q10: What is the annual Certification fee for D/FW MSDC Certification?

Certification fees are $270.00 and are good for 12 months (for companies with annual revenues less than $1 million. Additional fees are assessed for larger companies). Your MBE certificate will have an anniversary date. Certification anniversary dates are always the last day of the month that your firm was certified and will not be permitted to change.

Q11: When is the annual payment for D/FW MSDC required?

Q12: Who makes up the membership of the Certification Committee?

The Certification Committee is made up of D/FW MSDC Corporate Members (no MBEs are on this committee). The committee’s role is to analyze and evaluate each applicant against national NMSDC Certification standards.

Q13: What does the Certification Committee look for in an application?

The Certification Committee is looking for legal ownership structure, involvement in the day-to-day management and operational control. Normally, the ownership structure and managerial control are straight forward; however, questions are usually about operational control issues.

The “ethnic minority” must be a US citizen who is an African-American, Hispanic American, Native American, Asian-Pacific American or Asian-Indian American. “Ownership” by an ethnic minority individual means the business is at least 51% owned by such individuals or, in the case of a corporation or an LLC, such individuals own at least 51% of the shares or units and shall have numerical control of the Corporation’s Board of Directors or the LLC’s Board of Managers.

The ethnic minority owners shall possess the title(s) and power to direct or cause the direction of the management and policies of the business and to make independent, unilateral day-to-day business decisions, a​s well as other major decisions on matters of management, policy, and operations.

The business shall not be subject to any formal or informal restrictions, through, for example, by-law/operating agreement provisions, partnership agreements or Charter requirements for cumulative voting rights or other arrangements that prevent the ethnic minority owners from making a decision for the business “without the cooperation or vote of any owner who is not a minority.”

In summary, the “certifiable MBE” must demonstrate operational and managerial control of the firm and its Charter Board (e.g., Board of Director for a corporation or Board of Members/Managers for a Limited Liability Company). This control shall “be real, substantial and continuing and shall go beyond the pro forma ownership of the business as reflected in the ownership documents. If the owners of the business who are non-minorities are disproportionately responsible for the operation and management of the business, then the firm is not controlled by minorities and shall not be considered a certifiable MBE.”

Q14: The MBE Certification process – how long does it take?

MBE Certification process can be completed within a 50 day timeframe. This is the objective of the Certification Committee and staff. However, this timeframe is usually not the norm. The norm is closer to being between 60 to 80 days. This added time is needed to get requested (additional explanations) information from the applicant. If the documentation presented does not demonstrate that the applicant meets the national Certification requirements, the applicant will be contacted formally. The time it takes to be certified is dependent on the firm’s legal structure, the complexity of its ownership structure and the physical location of the firm. However, the process has some built-in statutory activities that must take place. If you application package is not complete, obviously the process will take longer.

NOTE: annually, Certified MBEs have to be re-certified prior to their anniversary date (last day of the month that they were originally certified). The Annual ReCertification Fee is $270.00 for companies with annual revenues less than $1 million. Additional fees are assessed for larger companies. The process included a submission of ReCertification Application and current year tax forms. ReCertifications, please start the recert process 60 to 90 days before your anniversary date.

Q15: What are the steps in the MBE Certification process?

Please note the following seven (7) steps must be completed “in full” to obtain valid Minority Business Enterprise (MBE) Certification:

1) Receipt of a “COMPLETE” application by the the DFW MSDC office (Applications are date stamped upon receipt).

2) For an application to be COMPLETE, it must include all required support DOCUMENTATION and support EXPLANATION. If your application is INCOMPLETE, you will be formally notified by fax or email requesting either additional information or an explanation. (NOTE: You need to have both an operational fax number and email address). If your application is complete, you will also be notified.

3) Certification Committee REVIEW (2nd Thursday of each month) and recommendation for site visit or denial of applicant.

4) SITE VISIT with principles (at least 51% must be present).

5) APPROVAL of an MBE application must be done by the D/FW MSDC Board of Directors. The Board physically meets every month.

6) Applicants will be formally notified of Board APPROVAL. In addition, the applicant will be required to attend a New Members meeting.

7) MBE Certificate will be given out after the New Members meeting. Also, the $270.00 certification fee will be collected at that time.

Q16: Are there any conditions to new MBE’s Certification?

Certification offers numerous benefits; however, there are some “Conditions of New MBE Certification:”

If your MBE Certification lapses, you will be required to complete the entire “Certification process.”

Second, you must notify (within 30 days) the D/FW MSDC of any changes in ownership, control or operations in your firm. This includes name changes. You are required to submit a Recertification Application every year.

Third, your initial Certification “anniversary date” is very important. Sixty (60) to ninety (90) days prior to your Certification’s anniversary/expiration date, we recommend you start the reCertification process. You will receive an annual reminder to recertify, but ultimately, you are responsible for the timely processing of your ReCertification. Your ownership of this ReCertification process ensures there is no lapse in your MBE benefits! Your anniversary date will not be “moved or changed” and will remain with your organization throughout the Certified MBE process. Recertificaiton Fees are $270.00 for companies with annual revenues less than $1 million. Additional fees are assessed for larger companies.

Q17: What happens if my firm does not get certified, is there an appeal process?

An applicant business, which believes it has been wrongly or incorrectly denied Certification as an MBE or wrongly or incorrectly decertified, may appeal with the D/FW MSDC Board of Directors within thirty (30) days of denial or termination of Certification. The appeal must be signed and dated. The Board will review and make a recommendation. The applicant will be notified in writing by the President of the Board’s decision. The decision of the Board is final.

Q18: If my application’s appeal is denied, is there a reapplication process?

Any applicant whose application for Certification or Recertification is denied and such denial affirmed may, after one year, reapply for Certification upon the submission of information indicating a change in status or other circumstances that prevented Certification or which caused a denial or termination of Certification.

Q19: What documents should I submit if my business is incorporated?

If incorporated, you must provide the following:

Fill out the current D/FW MSDC Application (Please fill out all applicable fields. If field is not applicable, please write N/A)

Certificate of Incorporation

Articles of Incorporation

Stock Certificates (front and rear) and Stock Ledger**

Minutes of Board of Director’s meetings and Shareholder’s meetings.

Bylaws (executed and attested) – basically, who is the president and how will the stock be held?

Amendments (if applicable)

Any agreement(s) pertaining to the ownership, operation and control of business

Business cards of all principals with appropriate corporate titles

Resumes of all principals

Copy of Driver’s Licenses for all principals

Proof of US Citizenship (Birth certificates or U.S. Passports only) for all principals

Corporate Bank Resolution Agreement(s) including Bank Signature Card

Business Location Lease Agreement(s) (Security Deeds, if home-based)

Equipment Lease Agreement(s) if applicable

Insurance Agreement(s) if applicable

Copy of the businesses’ executed cancelled check (front and rear)

** Stock Certificates — For incorporated businesses, provide a copy of all Stock Certificates. Certificates should reflect the total stock distribution (e.g., who owns what quantity of shares). If some of the shares have not yet been issued, provide a statement (signed, dated and attested by the appropriate corporate officers) of the number of shares that are outstanding.

Q20: What documents should I submit if my business is a partnership?

If a Partnership, you must provide the following:

Fill out D/FW MSDC Application (Please fill out all applicable fields. If field is not applicable, please write N/A)

Partnership Agreement (executed and attested)

Amendments to the Partnership Agreement (if applicable)

Any additional agreements pertaining to the partnership ownership, operation and control of business

Minutes of partnership meetings

Business cards for all partners

Resumes for all partners

Copy of Driver’s Licenses for all partners

Proof of Citizenships (Birth certificates or U.S. Passports only) for all partners

Q23: What documents should I submit if my business is a part of a Joint-Venture (JV) Partnership?

Q24: What financial statements are needed by a firm?

The National Minority Supplier Development Council (NMSDC) requires two (2) full years (e.g., twenty-four months – no exception) of financial statements be submitted regardless of the length of time you have been in business (prepare proforma statement shall be used to complete the remainder of the year). Financial statements mean the following: Balance Sheet, Profit & Loss Statement, and Statement of Cash Position.

Q25: What financial statements should I submit if my company is a startup business or operating less than 12 months?

If your company has been in business for less than a year, provide a copy of the following:

Beginning Balance Sheet & Source and Use Statement

Actual Profit and Loss Statement for the length of time you have been in business

Actual Cash Flow Statement for the length of time you have been in business

Ending Balance Sheet -If your Business runs on a Fiscal year, submit documents for a twelve month period coinciding with the fiscal year period.

If your Business runs on a Calendar year, submit financial statements for the previous Calendar year.

If your Business has been operating for less than 12 months (e.g., two-months for example), you should submit actual financial statements for the two-month operations and pro-forma for the remaining ten-(10) month, totaling 12 months.

Q26: What tax information should an applicant firm submit?

NMSDC policy requires submission of your Business Tax Return for the two preceding years. If you have been in business for more than a year and have not filed taxes, submit a copy of the previous year’s tax return and a copy of your Automatic Extension Agreement. For Start-up Businesses, please write a letter indicating you are a start-up business and have not filed taxes and submit two years of personal tax returns.

Q27: What happens after a firm becomes certified?

Upon payment of dues, a Certificate and Welcome letter will be submitted to new certified suppliers. In addition, a User-Name and Password will be issued for access into the D/FW MSDC database available on our Website. Certified suppliers will obtain access to all MBE, government agencies and corporate representatives affiliated with the council. A complete database including contact names, mailing addresses and e-mail addresses will be available. Certified suppliers will also have access to on-line Bid Opportunities submitted by our corporate and government members. All new certified suppliers will be invited to upcoming New Certified MBEs Orientation, Bi-monthly luncheons and all other D/FW MSDC/NMSDC sponsored networking and procurement functions.

Q28: How can a firm capitalize on being a certified supplier of the council?

There are several ways to take full advantage of all the Council offers. However, active involvement and participation are keys to capitalizing on your certified supplier opportunities.

1) Become an active participant on D/FW MSDC committees. Committee structures exist to assist D/FW MSDC in the execution of its annual operations and provide certified suppliers with a direct opportunity to network with other MBEs and government and corporate affiliates. The following committees are available for certified supplier participation:

Professional Services Industry Group

Marketing + Industry Group

Construction Industry Group

IT Industry Group

Health Industry Group

Safety and Environmental Industry Group

Inclusive Supply Chain Working Group

Membership and Growth Working Group

Marketing Working Group

Council Operations Working Group

2) Target specific corporation(s) you would like to do business with. Research the company’s business and develop a strategic approach for conducting business. For Recertified suppliers, every corporation is currently buying from someone! Who are your competitors?

3) Participate in educational seminars offered by the Council, bi-monthly luncheons, National conferences and all other D/FW MSDC/NMSDC networking functions.

5) Update our offices on any changes regarding the operation of your business. Communication to certified suppliers is driven by updated information contained in our database. Please keep us informed of any changes.

6) Continue to effect the successful operations of your business by offering quality, timely, and professional services.

Q29: In general, are there some other basic questions an applicant firm should consider?

Yes, the market is a buyer’s market. This means the buyer has plenty of choices. Notice how many rebates, discounts and promotions are being used to entice consumers to purchase. So, if you are thinking about being certified, first think about the business and industry you’re working in and the industry your potential customers are in.

What is your business model (i.e., how will you make money) and how will it create value for your potential corporate customers?

Are you familiar with your potential corporate customer’s knowledge management system? Is it explicit based? Is it tacit based? Is it a combo (explicit/tacit) based?

Q30: Frequently asked questions about the role of the D/FW MSDC in the Certification process?

The document will assist new applicants in understanding and navigating the Certification process used by D/FW MSDC and other regional councils of the National Minority Supplier Development Council, Inc. (NMSDC). Each question on the application is designed to document the following:

The Ethnic minority* owns at least 51% of the firm, is a US citizen, has an office physically located in the North Texas Region and is authorized to do business in Texas.

The Ethnic minority* is involved in the day-to-day business and has the appropriate title(s).

The Ethnic minority* is in “control.” The control must be real and absolute.

Q31: What is the role of the D/FW MSDC in the Certification process?

As an affiliate of the National Minority Supplier Development Council, each affiliate regional council follows national Certification standards as established by our Fortune 500 Corporate Members. Thus, the regional councils are certifying for their corporate members and following their requirements. In addition, “it is the responsibility of each and every applicant to prove that its firm meets the Certification requirement rather than the regional council’s Certification committee to prove that the applicant does not meet the criteria.” Since each regional council’s Board of Directors charge their Certification committee to “analyze and evaluate” the applicant’s ownership, day-to-day management and absolute control of the organization as presented, the Certification Committee shall offer no assist. It is neither the committees’ nor the staffs’ responsibility to assist an applicant in completing the Certification application. The Certification staff and committee shall review what an applicant presents and make an appropriate recommendation to the Board of Directors based on those facts. There are no right or wrong answers, only verifiable answers.